7th Pay Commission, OROP will not Impact Fiscal Deficit – “I think we are in a very good shape as far as fiscal management is concerned. That was appreciated by all economists,” he said.

Implementation of One Rank One Pension (OROP) and increase in salary bill due to 7th Pay Commission will not strain government’s fiscal position, Minister of State for Finance Jayant Sinha today said.

“I think we are in a very good shape as far as fiscal management is concerned. That was appreciated by all economists,” he said while interacting with reporters after a meeting of economists which was chaired by Finance Minister Arun Jaitley at NITI Aayog.

He made it clear that the government’s fiscal position is strong enough to bear the impact of OROP and implementation of 7th Pay Commission.

OROP is likely to result in an outgo of Rs 8,000-10,000 crore this fiscal. The 7th Pay Commission report in December is expected to recommend a hike in salary of central government employees.

“We had some of India’s most eminent economists and commentators there. Obviously, it is very early in the cycle to start the consultation. But we felt that if there were good ideas, we could incorporate them even in this fiscal year.

Obviously, for the preparation of the current budget, we could begin the work on that right now,” he said.

“It was very good interaction and we look forward to incorporating much of this for this fiscal year as well as coming fiscal.”

“We estimate the overall cost to be Rs 16,000 crore or 0.1 per cent of GDP in FY16… The existing defense pension bill will go up by Rs 10,000 crore, while arrears totalling Rs 12,000 crore will be paid out over two years,” Pranjul Bhandari, chief India economist of HSBC Global Research, had said last month.

The Central government’s salary bill is projected to rise by 9.56% to Rs 1,00,619 crore in FY16 and the implementation of the 7th Pay Commission recommendations is expected to lead to a further rise in government expenditure.

Earlier this month, the Union finance ministry had said that the Pay Commission would be aware of the government’s fiscal issues while making recommendations on salary hike to about 48 lakh Central government employees and 55 lakh pensioners.